Standing Committee A

[Mr. Peter Atkinson in the Chair]

State Pension Credit Bill [Lords]

Clause 1 - Entitlement

James Clappison: I beg to move amendment No. 19, in page 2, line 4, at end add—
'(7) The Secretary of State shall as soon as practicable after the end of the fiscal year 2004–05 and as soon as practicable after the end of each fiscal year thereafter lay before Parliament a report setting out— 
 (a) the number of those entitled to the state pension credit; 
 (b) the number of those entitled to— 
 (i) the guarantee credit alone; 
 (ii) the guarantee credit and the savings credit; and 
 (iii) the savings credit alone; 
 (c) the number of entitled persons claiming the credits set out in paragraphs (a) and (b) above; 
 (d) the take up in terms of expenditure in respect of each of the categories set out in paragraphs (a) and (b) above; 
 (e) details of the steps taken to encourage those entitled to state pension credit to make a claim for it, and of the steps to advise those making such claims; 
 (f) representations made to the Secretary of State by the Social Security Advisory Committee or by such organisations as may seem to him representative of the interests of pensioners in connection with the operation of state pension credit.'.

Peter Atkinson: With this it will be convenient to take amendment No. 20, in clause 3, page 3, line 34, at end add—
'(9) The Secretary of State shall as soon as practicable after the end of the fiscal year 2004–05 and as soon as practicable after the end of each fiscal year thereafter lay before Parliament a report containing an assessment of the effect of the savings credit on the propensity of individuals to save for their retirement.'.

James Clappison: I welcome you to the Chair, Mr. Atkinson, and I look forward to serving under you.
 The amendments address the extent of the take-up of the pension credit and the relationship between that and saving. We hope that the Minister will regard the modest but constructive amendments in a helpful spirit. 
 Amendment No. 19 addresses the question of take-up. Much of what has been said about the pension credit has been postulated on the basis of a take-up of 100 per cent. However, we know from other income-related benefits that take-up will be much less than that—I believe that the Government accept that. Indeed, the Department for Work and Pensions stated in its memorandum to the Select Committee on Work and Pensions that the assumed take-up for the pension credit is 67 per cent. in its first year. However, the Department was unable to satisfy completely the Committee on the level of take-up in subsequent years. I venture that because the Committee concluded: 
''We were concerned about the Department for Work and Pensions' inability to produce reasonable estimates for such an important figure as the take-up of a key Government benefit. We urge the Government to set out clear, and achievable, targets for levels of take-up of the Pension Credit.''

Tim Boswell: My hon. Friend makes a compelling case. Does he agree that the whole business of assessing how the system is turning out is germane to the concerns expressed by the Select Committee that the long-term cost, evaluation and evolution of the pension credit scheme are almost entirely opaque?

James Clappison: I may use the word ''opaque'' in a slightly different context later in my contribution. However, the future cost of the pension is important for the reasons that my hon. Friend mentioned and because organisations, interest groups and future pensioners need as much clarity as possible on the subject. That lies at the heart of the modest amendment, which would enable the Government to throw more light on the matter to satisfy bodies, such as the Select Committee, that are not completely happy.
 As the Minister will know, many interest groups and organisations that gave evidence to the Select Committee were worried about take-up. Two of the many organisations were Age Concern and Help the Aged. Help the Aged said that 
''benefit take-up is extremely important for a number of reasons.''
 Although I shall not go into all the reasons that Help the Aged set out, two are particular salient to our debate. First, it said: 
''older people are less likely to be receiving the benefits they are entitled to than people of working age. This is particularly so for Income Support . . . where pensioners are much less likely to be claiming their entitlements than younger people''.
 That relates to lack of take-up by older people. It continued: 
''worse, the proportion of older people who are entitled but not claiming has been increasing in recent years. Older people are now less likely to be claiming their entitlements than they were when Labour came to power''.
 I am sure that that worries all members of the Committee—it certainly worries Help the Aged.

Kevin Brennan: The hon. Gentleman would, as we do, wish to see the maximum possible take-up of the pension credit. Is it not, therefore, important to be careful about the language that we use in discussing the Bill, which will pass into law, and ensure that we do not put people off applying for pension credit by irresponsibly banging on about the means test when it clearly does not conform to the image of the means tests of the 1930s and national assistance that he is trying to put into pensioners' heads?

James Clappison: I shall discuss means-testing in a moment. Hon. Members may have had the opportunity to study all the evidence submitted to the Select Committee. That is one of the factors about which organisations that represent older people are most worried. Given the spirit of the hon. Gentleman's intervention, I hope that he will encourage the Minister to examine the amendment even more carefully and attentively. Amendment No. 19 is
 drafted in characteristically moderate language for Conservative Members. Its purpose is to bring to light the factors that the hon. Gentleman mentioned, and it should find favour with him.
 One factor that we must bear in mind in considering why older people do not always claim the income-related benefits to which they are entitled is their attitude to means-testing. According to Help the Aged: 
''All the evidence suggests that there are large numbers of pensioners who are resistant to means testing.''
 Research carried out by the Government has found that a substantial proportion of those who do not claim the minimum income guarantee have what is described as ''attitudinal resistance''. Help the Aged is far from alone in expressing that view. In evidence to the Select Committee from a wide variety of organisations and interest groups from different parts of the political spectrum, including the Institute for Public Policy Research, similar concerns were expressed.

Julian Brazier: My hon. Friend makes a powerful point. Does he agree that the Minister's remarks this morning emphasising that the Bill should be regarded as an anti-poverty measure and classed with benefits such as income support will further underline that point?

James Clappison: My hon. Friend makes a good point. The Minister regards the Bill as an anti-poverty measure and will want maximum take-up. He will therefore want the fullest possible information about take-up so that that can be brought to light.

David Cairns: I am reading the amendment with interest. In paragraph (e), the hon. Gentleman wants to know
''details of the steps taken to encourage those entitled to state pension credit to make a claim for it''.
 Is that an undertaking from the Conservative party that there will be an end to the constant bleating about the cost of the Government promoting such important benefits to people? When we tell people about the benefits to which they are entitled, all we hear from the Opposition is that that is Government propaganda. Presumably, therefore, the hon. Gentleman is saying that he will now not complain about that cost.

James Clappison: The hon. Gentleman tempts me away from the spirit of the amendment, which asks for details of the steps taken. I should have thought that he would join us in wanting such matters to be explained to people, as they are not entirely self-evident.

Patrick Mercer: If the methods of promoting take-up of entitlement were effective and so many people were not left out of the equation, the complaints might be fewer.

James Clappison: I do not know whether the hon. Member for Greenock and Inverclyde (David Cairns) takes an interest in the subject. If he does, he will know that one of the main concerns expressed was that some expensive advertising campaigns apparently had little effect. I am sure that he would welcome research into
 that. I can think of several examples with regard to social security. I am sure that he joins us in wanting to ensure that money is well spent.
 Amendment No. 20 relates to saving, which is an extremely important issue that we shall discuss in different contexts. Once again, we simply want to bring matters to light and have as much information as possible about the consequences that flow from the Bill. 
 On Second Reading, the Secretary of State said: 
''It should surely also be an objective of the Government to put in place incentives to encourage people to save.''—[Official Report, 25 March 2002; Vol. 382, c. 606.]
 For our purposes, the question is whether the Bill will encourage more people to save. Will it enable that objective to be fulfilled? In many ways, the Bill is a follow-on from the minimum income guarantee, which created a disincentive for saving through the withdrawal of benefits at the rate of 100 per cent. in respect of savings-generated income that falls beneath the guarantee level. 
 This morning, Ministers said that the Bill promotes saving; it has to because of the measures that the Government took with the minimum income guarantee. They are putting the minimum income guarantee at a substantially higher level than the state pension, and it is likely to get higher still. That created the need for the measure. We must ask whether the provision puts right the disincentive that was originally created by the Government through the minimum income guarantee.

Kali Mountford: Will the hon. Gentleman give way on that point?

James Clappison: Certainly, but I hope that the hon. Lady will not—

David Cairns: Ask a hard question.

James Clappison: The hon. Lady may certainly ask a hard question; I shall do my best to answer it. I hope that she is not going to suggest that the minimum income guarantee is not a disincentive to save, because that is the Government's case.

Kali Mountford: I should merely like to refer the hon. Gentleman to paragraph 23 on page 14 of the Select Committee report, which welcomes the recognition and extra reward that the pension credit will provide. The paragraph also mentions the minimum income guarantee. Surely we must consider pensioners' provisions as a whole, and not point by point, as he has tried to do.

James Clappison: My question for the hon. Lady is this: will the extra reward that the pension credit establishes encourage saving? We know that there is no incentive for saving for those who see their every pound—100 per cent. of the savings they accrue—taken off their benefits. The Government know that. We must now ask whether the reward and withdrawal system that the Government are putting in place will create an incentive to save. As the hon. Lady has studied the Select Committee's report, she would do well to consider also the evidence given to the Select Committee by expert groups. One of the points made by the expert groups was that the Government's
 proposals do not entirely remove the 100 per cent. disincentive to save. Many groups are still subject to that disincentive.
 As the hon. Lady and other hon. Members are evidently interested in the subject, I shall ask them some questions. Perhaps they would like to tell me whether they agree with the view that has been expressed about those—there are many of them—who are entitled to less than the full basic state pension. The first part of such a pensioner's personal savings will be used to bring them up to the level of the basic state pension and will not attract the additional savings credit. They will face a rate of withdrawal of 100 per cent. Quite a large number of those people are women who for historical reasons have not have the opportunity to accumulate a full savings record. 
 The hon. Lady will be interested to know that that is not the only case in which women are the losers. There is also the case of women who are aged between 60 and 65. They become entitled to the guaranteed part of the credit at 60, but they are not entitled to the savings credits until they reach 65. Presumably, between 60 and 65, if they fall within the appropriate threshold and have savings, they will have a rate of withdrawal of 100 per cent. and will gain no benefit from their savings in that period of their lives. If I am wrong about that Labour Members will put me right, but that seems to be explicit in the Bill. Those two substantial groups, one consisting exclusively of women and one of many women, will have a 100 per cent. withdrawal of their savings under the proposals.

Tim Boswell: If my hon. Friend looks in detail at the Select Committee Report, as I am sure he has, he will see that paragraph 31 on pages 16 and 17 suggests that the Department had some difficulty estimating the number of those with incomplete rights. The Select Committee's conclusion was that
''there will be around 50,000 pensioner 'benefit units' who have private income for which they will see no benefit . . . Another 2–300,000 will be 'rewarded' for only some of their private savings.''
 That is quite a significant number of pensioners.

James Clappison: My hon. Friend's point is so important that I am sure that we will come back to it when considering other clauses and amendments. For the purposes of this amendment, it is extremely relevant to whether it creates a disincentive to save.
 I wish to move on from those who suffer 100 per cent. withdrawal from their savings. There will now, under these provisions, be for many others a much lower rate of withdrawal of 40 per cent. after they reach 65, and then it is the Government's case that those people will see a benefit from having saved. It is beyond peradventure that they will be better off by saving at that stage of their lives than those with no savings at all, because they will have the benefit of 60p in the pound for every £1 of their savings. However, that by itself does not fully address the question of whether they will find it worth their while to make savings earlier in life—whether there will be an incentive for them to save—because, to put it bluntly, what they save earlier in life will be subject to a 40 per cent. rate of effective tax later on. 
 As the hon. Member for Colne Valley (Kali Mountford), who is interested in the Select Committee, will know, that point is made much more elegantly, and with far greater authority, by the Association of British Insurers, in its analysis of the implied rate of saving for those in the relevant circumstances. Its analysis looks at the implied rate of return for an individual saving £50 a month and, as the hon. Lady and others may know, it defines a negative implied rate of return as suggesting that saving, in fact, has a net cost to the individual; less value is received in increased retirement income than is paid through contributions. 
 In its evidence to the Select Committee, the Association of British Insurers compares the present situation with the minimum income guarantee, and then the situation that will appertain under the pension credit. It concludes: 
''Under the Pension Credit as outlined in the State Pension Credit Bill saving is more worthwhile for those saving for short periods of time than it is now, but the implied rate of return is still negative for more than 10 years. This is because any saving results in a reduction in income from MIG and Pension Credit of 40p for every £1 of saving income.''
 The Association of British Insurers is not alone in expressing concern about the impact of the pension credit on savings behaviour. Similar concerns are expressed by the Institute for Fiscal Studies, the Institute for Public Policy Research, and many other interest groups, as well as those who have financial expertise in the field, and many of the interest groups and organisations that represent elderly people. Age Concern succinctly states: 
''Given full information people may decide that if say £10 of extra income is only going to make them £6 a week better off (or possibly far less if they are also entitled to other means tested benefits) it would be better to spend the money when they are younger.''
 I am not a financial expert of any description, but against this background and having read the views of these financial experts and the concerns of others, it seems to me that there is great uncertainty about the effects of the pension credit, to say the least. The uncertainty is increased by the fact that, evidently, more and more people will be drawn into it, at least for the foreseeable future—as we know, they will be drawn into pension credit, as the threshold increases in line with earnings. That point is made by the Institute for Fiscal Studies. 
 It has been argued in some quarters that all of this is unlikely to fall within the contemplation of pensioners. It is not my experience that pensioners are entirely uninterested in the effective treatment of their savings under the tax and benefit system, especially when it comes to what they regard as instances of double taxation. I am referring not only to pensioners, but to those who advise them. These days, more individuals receive professional financial advice. Those advising people who are looking towards their retirement will need to be aware of the treatment of savings under the pension credit system and will face difficulty in discharging the unenviable task of studying the effect of the pension credit in individual cases. 
 I am not intimately connected with the Institute for Public Policy Research, but it has an interesting 
 perspective on such matters. My hon. Friend the Member for Daventry will be pleased to know that it used the word ''opaque'' when it said: 
''the Pension Credit is a highly opaque means of generating the right incentives; it is extremely difficult for individuals to know what to expect from it, especially over the long time periods relevant to retirement planning. The problem does not just affect the individual planning for their own retirement: professional advisers are in a similar position in respect of their clients.''
 The Minister may put a different complexion on such matters and put forward compelling arguments about the effect of the pension credit on savings. If he does, he will make a case for the amendment. It seeks to bring to light what happens with savings behaviour under the pension credit system. The Government's case is that pension credit will promote saving; that it will not only give pensioners an extra reward, but that it will create an incentive for saving earlier in life. So surely the Minister will look with some favour on the amendment because the Government will want to be as brave as their words about the pension credit and will want to make full information about it available. I hope that he will regard the amendments in the constructive and moderate way in which they are couched. We are asking only for information to be brought to light so that the exact effects of the measure are known.

Steve Webb: I welcome you to the Chair, Mr. Atkinson. I have much sympathy with the amendments . The hon. Member for Hertsmere (Mr. Clappison) put the case well. Amendment No. 20 is probably pointless, however. As an academic, I suppose that I should not vote against more research being undertaken but, even if the amendment were accepted, the report that would result from it would be almost unilluminating. As an analogy, I cite yesterday's debate about the effect of the new deal with one side saying that it had been tremendously successful and the other side saying that it had been relatively unsuccessful. Vast amounts of research have been carried out into that, yet each side of the House chose to use the figures that suited it from which to draw its own conclusions. The problem with such matters—as with amendment No. 20—is that we are trying to work out what would otherwise have happened, how much of the effect was due to the specific measure and how much of it would have happened anyway. In matters such as the new deal, we could probably go a long way down the road of working out what may have happened anyway, but to work out total savings is extraordinary. We do not even know how much savings there are. Governments are bad at knowing the history of savings. As the hon. Member for Havant (Mr. Willetts) regularly reminds us from the Opposition Front Bench, the Government do not know the current amount of pension savings to within tens of billions of pounds.

Tim Boswell: Will the hon. Gentleman acknowledge that no less than the Association of British Insurers has estimated that the annual current savings gap is in the order of £27 billion, which is a lot of anyone's money even if the figures are not precise.

Steve Webb: It is indeed. There is a substantial savings gap, but even the best of researchers would struggle to reach a robust conclusion whether a particular measure had influenced the behaviour of a group of current workers to save more or less, rather than the many other issues that may be affecting their savings behaviour. Although I understand where the hon. Gentleman is coming from, my fear is that even if we had such a report it would not convince anyone either way. I would not object to such a report, but I doubt whether it would be possible to disentangle its findings from the many other things that affect people's propensity to save, among which the proposal is, as he and I probably agree, likely to be peripheral. Trying to ascribe an amount to it is, I suspect, almost impossible.
 Far more practical and desirable is amendment No. 19, which would require the Secretary of State to put in the public domain reliable information on the numbers receiving the different components of the pension credit and the numbers entitled to it. The issue of take-up is fundamental to assessing the pension credit, and the hon. Member for Hertsmere is right to raise it. 
 We should be especially worried about take-up. The Government are doing a good thing. They are contacting people when they reach pension age and telling them about retirement pensions and pension credit. Over time, that will tend to increase take-up. That is entirely good, and the Government should have done that a long time ago. I support the Government that far. The problem with hitting people at 60 and suggesting that there might be quite a good level of take-up on the inflow is that it will be about another 40 years before everyone has been through the process. All Committee members would want some serious progress on take-up substantially more rapidly than that. We cannot merely wait until everyone in the system now has worked their way through, as we shall probably all be dead by then. We need to make more rapid progress. 
 Reports such as the amendment suggests would put pressure on the Government to give us reliable figures on take-up. One of the more disappointing aspects of the Department for Work and Pensions and its predecessor in recent years is that it has been rubbishing its own take-up figures. Lord Rooker of Perry Barr, the previous Minister with responsibility for pensions, was fond of saying, ''These are not real people; they are just statistics.'' Yet the surveys on which take-up estimates are based are surveys of real people. Interviewers go to households, sit in front rooms with laptop computers, go through people's circumstances and calculate that those people are entitled to benefits and are not claiming them. To say that they are not real people is absurd.

Maria Eagle: Does the hon. Gentleman accept that Lord Rooker meant that the figures were based on a 5 per cent. sample and that they are extrapolated from that figure? Although they are statistically meaningful, that is what he was referring to. We have not counted up all the people.

Steve Webb: I take the hon. Lady's point; indeed, the figures were based on a sample of much less than 5 per cent. However, as the Minister responsible for pensions, the noble Lord was trying to rubbish the figures and to suggest that, because when Thora Hird did her stuff in all the adverts, the number of people who ended up claiming extra was nothing like the numbers in the take-up figures, they did not really exist on the scale that his figures suggested. That was what he tried to imply, as the record will show.
 That is dangerous. I should feel pretty disheartened if I were an official in the Department constructing the take-up figures, which take months of careful statistical analysis, to find the Government rubbishing their own figures because those figures are inconvenient. 
 As I believe the Minister or one of his colleagues said yesterday, a margin of uncertainty is attached to the figures. We accept that. They are estimates. They are based on a sample, and the recording is not necessarily always accurate. However, it is clear that large numbers of pensioners, whether a third of a million or two thirds of a million—that is the sort of range with which we are dealing—are missing out. 
 The danger with a proposal such as the pension credit—the reason why amendment No. 19 is so welcome—is that the problem will get worse. It will get worse not for the 60-year-olds who receive the letter, who are more likely to claim—I welcome that—but for the stock. 
 The fundamental reason why take-up might end up being lower, possibly for years, relates to why a person claims a benefit. People claim a benefit if they believe that they might be entitled to it. That has to be the first thought. They hear about it, read about it and think, ''That could be for me.'' If the circumstances involved and the system are so complicated that it is not possible to work out readily whether it might be for them, or it does not occur to them that it might be for them, take-up could end up being lower. With the MIG, or income support, or whatever we call it, if a Minister says that everyone receives £100 a week, and people think, ''I'm not getting £100 a week; maybe that's me'', fair enough. However, if we start talking about people possibly being entitled to a tapered disregard, people's eyes immediately glaze over.

Tim Boswell: Is it not also important that we examine the stock of people who might be in receipt, or otherwise, of pension credit? If their circumstances change while they are in receipt of the benefit, although they may receive something, they will not be paid their full entitlement. Even if there is the entry point of the allocation of the first state retirement pension, people whose circumstances change two and a half years down the track will not know that they are under-recorded and receiving less than their entitlement.

Steve Webb: The hon. Gentleman makes an important point. There is absolute non-take-up by people who are entitled and do not receive, and there is an under-entitlement of people who would be entitled to more if the correct assessment was made. The
 amendment would prompt the Government to take their own figures seriously—rather than rubbishing them, as they are prone to do—and to work harder to give a higher profile to the system and to increase the impetus of the drive for take-up.

James Purnell: The hon. Gentleman argues that people will not apply because they will not know the exact amount to which they are entitled. People on the doorstep know that an injustice is going on because their small private-sector pensions are completely taken away under the current system. It would be easy to address that through an advertising campaign because people know that they should receive recompense. The hon. Gentleman's policy would do nothing for a person aged between 65 and 75 who was losing their entire pension, but we will be able to give them the pension credit.

Steve Webb: I do not quite follow the hon. Gentleman's logic. He suggests that if I were a person aged 70 with a small private pension, I may hear on the news that there is a new scheme for people with private pensions. However, the situation is not as simple as that. If I had a private pension above a certain threshold, I would not get a reward for saving because the saving credit is tapered away. For example, if I had a £80 state pension and a £55 private pension, I would not receive the pension credit. Therefore, any coverage would say that not all people with a private pension are entitled to the credit, but that some people are. That is because the scheme is tapered.

Kali Mountford: Would not a fairer analogy be drawn with the tax system? Pensioners do not have difficulty filling in their tax returns if they are not absolutely sure about what the return will accrue. Does not the system bear more similarity to a tax credit than to income support, about which people would want more precise information about entitlement? Does that cover the attitudinal problem that was mentioned in the earlier debate?

Steve Webb: The hon. Lady raises a range of issues. Many pensioners do not fill in tax returns. It is unusual if a pensioner sees a tax return because two thirds of pensioners do not pay tax.

Ian McCartney: Because of this Government's policies.

Steve Webb: One of the Government's policies—there we go. Apparently, the goal is that fewer pensioners will see tax returns.
 The poorest two thirds of pensioners, who are the target group of the pension credit, do not see tax returns—on average; some of them do. No analogy is drawn by saying that because pensioners are used to dealing with paperwork, the form will not frighten them.

Kali Mountford: I am grateful to the hon. Gentleman for allowing me to clarify that our debate has been about the attitude of pensioners, the level of take-up and whether a perceived injustice or a perception of means-testing would keep people out of the system. I tell the hon. Gentleman that many of my constituents complete tax returns or, at least, do
 not have the same mental attitude about that type of system as about income support. Could the advantage not be that the attitude to this system would be different and unlike the system that he mentions?

Steve Webb: The system is not seen as different because the whole thing is integrated. A guarantee credit and a saving credit make the pension credit. What is the guarantee credit? It is income support by another name, although I accept that it is more humane means-testing. The sums are done on the thresholds of the income support system. A person would claim one benefit at the same time as the other. The two could not be more intertwined. The idea that people will think, ''Oh, it's like a tax return; I don't mind filling those sorts of forms in'', is very alien.
 The key point that worries me and the reason why I think that the amendment would be so helpful is that people who will be beyond retirement age when the credit is introduced, and especially people whose circumstances have changed, will experience the take-up problem. One of the good things that the Department's research on take-up has shown is that some of the pensioners who are least likely to take up are those to whom some trigger event has happened, such as hitting 75 or 80, or becoming a widow. 
 Governments can take action to spot people at such points in their lives, and the Department is already taking action to catch some of them. We want to know about such matters systematically. We want to learn what is being done each year, what works and what does not. We are all on the same side on that subject. If there is to be a pension credit, we want people to claim it. The point of such a report will be to apply pressure and raise the profile of take-up, and that is entirely laudable.

Bill Tynan: Will the hon. Gentleman say what benefit he believes would come from the amendment, and what numbers would take up the credit if the amendment were passed? He argues that we would have additional take-up.

Steve Webb: I haven't a clue how many people would take up the benefit. The take-up figures are almost an irrelevance, first because they are woefully out of date, and secondly because when they are published the Government rubbish them. Reliable estimates of take-up are not part of the debate. If we had quoted a figure of 500,000, previous Ministers would have said, ''Well, they are not really people,'' or ''It's only statistics,'' or ''We don't really know.'' The current Minister and his colleagues say that there is such a huge margin of error that we cannot have any confidence in the numbers, so take-up gets downplayed.
 If the amendment were passed, we would know what the Government do every year, what works and what does not, and whether take-up was going up or down. If the system were to change—and, for goodness' sake, the systems are always being changed—we would get a feel for whether the change had helped or hindered take-up. The report would put take-up on the agenda. We could debate what the Government were doing about take-up every year. 
 There is no way that that could not at least help. I have no idea how many extra people the provision would bring on board. I simply cannot guess.

Kali Mountford: Can the hon. Gentleman tell me how that would be different from the general review of the Department in the annual report?

Steve Webb: Given that the Department produces take-up estimates periodically anyway, I suspect that the cost would not be noticed in a £100 billion departmental budget. I suspect that the sum of money that we are talking about could be spent in an afternoon by the Minister. It is negligible compared with the good that it could do in ensuring that people got the money to which they were entitled.
 The hon. Member for Hertsmere alluded to the position of women. Older pensioners are less likely to claim, and we know that older pensioners are more likely to be women. There is plenty of evidence that those who are missing out, in some cases on quite substantial sums, are predominantly women. A colleague of mine asked me what a pensioner neighbour of his who was struggling to get by could do. He described the circumstances. I said, ''Clearly, she is entitled to income support, as she is a pensioner.'' The other day he thanked me for that advice. The pensioner is now getting £20 a week that she did not receive before. 
 Some Labour Members seem to think that take-up will be better under a really complicated scheme. Under the current scheme, people are promised a minimum level of income that anyone can claim, but some 500,000 of them do not, and we have all met some of them. If that is so, there will be a real problem with a more complicated scheme.

Kevin Brennan: The hon. Gentleman is very generous in giving way. Will he accept that pensioners will be more likely to take up the credit when the so-called means test is much less onerous than it is for income support? He himself described the proposed means test as humane. Perhaps if he stopped using the kind of language used by Opposition Members to try to put fear into people about a means test, more and more pensioners would take it up.

Steve Webb: As I said on Second Reading following a similar intervention, I doubt my influence. I doubt whether using that phrase makes a blind bit of difference to the pensioners in the hon. Gentleman's constituency, who, I strongly suspect, do not know who I am, amazing though that may seem.

Kevin Brennan: Underestimate constituents at your peril.

Steve Webb: The key point is that a more complex system will have a lower take-up rate than a simpler one. That must be true because people make a claim if they think that they might be entitled. If any fool can see whether a person is entitled, that person might make a claim. If the means test is complicated and a person thinks that he or she might not be entitled, they might not claim. That stands to reason.

Maria Eagle: Is the hon. Gentleman arguing that the guarantee credit, which is the equivalent of the
 minimum income guarantee, is more complicated than the minimum income guarantee?

Steve Webb: No, I am not. I am saying that savings credit is what makes it all more complicated. The guarantee credit aspect of it is streamlined, compared with the minimum income guarantee, and there are a number of things in the guarantee credit that are a move in the right direction. It is the added complexity of the savings credit that means that the overall take-up of the combined pension credit risks being lower than for the existing minimum income guarantee.

Maria Eagle: I thank the hon. Gentleman for giving way again; he is being very generous.
 I would have a lot of sympathy with what the hon. Gentleman was saying if we were requiring pensioners to do the paperwork themselves. In fact, if we were to do that, the take-up rate might fall substantially, from whatever it is to an awful lot less. However, all we are asking pensioners to do is to tell us their circumstances in a much simpler way—and less frequently. Surely that should encourage take-up.

Steve Webb: We are introducing a new element that has not been there before. The savings credit is an entirely new element. It is bringing in a new group of people. It can be argued that there is some evidence that there is a pride barrier to claiming any sort of benefit apart from the pension. We are bringing in the next tier up of pensioners—perhaps another fifth or sixth, or whatever the figure is—who are more likely to have the pride barrier, because they are the small savers. It is a group of people for whom the attitudinal problems might be greater, and it is a more complicated scheme.
 Of course, we are not asking pensioners to do the sums themselves, but I keep coming back to the same fundamental point: who initiates the claim? The Government will write to people of 60 years of age, but who contacts a 73-year-old who, let us say, becomes a widow? Ideally, the Pension Service will pick her up; it would be great if that were what happened. However, what if something else happens? 
 On Second Reading, I used the example of Railtrack shares. If they were suddenly to collapse in value, an investor's capital would go down, their imputed income tax would go down, and they would become entitled. Would such people suddenly think, ''Oh, I might be entitled to a savings credit now''? I do not think that they would. They would become a person who does not take-up, which is why an amendment is needed.

Kevin Brennan: I am grateful to the hon. Gentleman for giving way. He mentioned my constituents earlier; I am sure that I am not known to the people of Northavon either. However, on his travels around his own constituency, has he never come across any pensioners on the doorstep who have been crying out for exactly this sort of measure? If he has not, he must represent a very strange constituency. In my experience, there is a huge latent demand for this kind of thing, and I predict to him—I am prepared to have a bet with him about it—that take-up will be higher.

Steve Webb: What I have discerned from my discerning constituents is that what they resent is the position that they have been put in, where their savings have stopped making them better off than the person next door, and that problem has got much worse over the past four years.
 Four or five years ago, the pension was very close to the means test. [Interruption.] The hon. Member for Cardiff, West (Kevin Brennan) is shifting ground here. With regard to the pensioners who resent the fact that their small savings are not doing anything for them, four or five years ago their savings lifted them clear of income support, and they got benefit from having saved, because they were a few pounds better off than the neighbour who had not. They are the people who I meet on the doorstep who say, ''I am no better off, because there is not a chasm between the pension and the means test.'' The fact that the savings credit will marginally ameliorate that does not take away their resentment. 
 I have hogged a lot of the Committee's time, but I wish to respond to one further intervention. However, I want to return to the point on women, and then I will try to conclude my remarks.

Kali Mountford: I hope that I will not delay the hon. Gentleman too long. Surely he remembers that, under the old system, pensioners would tell us on the doorstep, ''My neighbour's on income support and gets everything that comes with that. I have a little bit of saving and therefore I get nothing''. Does he not see that this measure starts to bridge the gap between the poor and the relatively poor, and gives some benefits to those with small savings?

Steve Webb: The point that the hon. Lady seems to be missing is that the number of people who feel that their savings have got them nowhere has been increasing. This Bill may, at the margins, reduce that number.
 The hon. Lady is forgetting that, when her party came to power in 1997, the gap between the pensions and the means test was small. I forget the exact figure, but I think that it was about £6 or £7 a week. Next year, it will be £23 a week. When her party came to power, a person with £23 of private saving was £17 better off than the neighbour on income support. Now, that person is no better off than the neighbour on income support, so we have to have another scheme to give back to such people some of the money that they lost as a result of the increase in means-testing, to put them in a position that is relative to their neighbour. [Interruption.]

Peter Atkinson: Order. The hon. Gentleman accepted an intervention and I should be grateful if hon. Members would allow him to respond.

Steve Webb: Thank you, Mr. Atkinson. The Bill goes some way to deal with a problem that has been greatly exacerbated in recent years, but it does not go the whole way because people, instead of being clearly means-tested and receiving the full benefit are, at the best, receiving 60 per cent. of the benefit of their savings.

Maria Eagle: I am not trying to make partisan points, but they are technically correct. The gap that the hon. Gentleman describes is basically due to the fact that the previous Conservative Government decoupled the basic state pension from earnings upratings. Consequently, there was much recipient poverty and it was becoming worse. The means test, the minimum income guarantee, income support—members of the Committee can call it what they will—is there to tackle that problem, hence the gap. Is it not still the hon. Gentleman's party's policy to increase the basic state pension in line with prices? That will not deal with the problem. We are dealing with it.

Steve Webb: Obviously, my party's policy is not related directly to the amendment. I shall happily lend the hon. Lady a copy of the Liberal Democrats' manifesto, which pledged state pension rises of £5 for those aged 65 to 74, £10 for those aged 75 to 79 and £15 for those aged over 80, and those sums are vastly in excess even of the earnings uprating of a whole Parliament. In other words, by substantially raising the state pension, people would be clear of the means test and their savings will count.
 Amendment No. 19 asked for statistics on those entitled to the 
''guaranteed credit alone;
(ii) the guarantee credit and the savings credit; and
(iii) the savings credit alone''.
 The Minister has often said that two thirds or three quarters of the gainers under the Bill will be women. Can we be given a breakdown of the guarantee credit and the savings credit by gender? Clearly, the minimum income guarantee is predominantly about women. It concerns poor pensioners and they are mainly women. Most of the money will go to women. When the Government say that two thirds or three quarters of the gainers will be women, I am not clear whether that is driven by the MIG and whether rewarding people with small savings is about women or men, or both equally. I do not know that information and the report proposed under the amendment No. 19 would help. 
 I hope that the Minister can give us in writing not only the overall figure of women gainers, but the proportion of the minimum income guarantee and the savings credit gainers who are women. I am grateful to have had the chance to pursue such important issues. As the Committee will have gathered, my key point is that take up is essential. At present, the position is unsatisfactory. The figures are out of date. They are derided by the Government. We need good, reliable evidence and the amendment would give it to us.

Tim Boswell: The Committee has already been treated to two serious presentations by my hon. Friend the Member for Hertsmere and the hon. Member for Northavon, and to some lively exchanges. I seek neither to prolong nor provoke those, but merely to make a couple of points. The purpose of the amendments is to invite the Government to commit themselves to an exercise in truth when presenting the effects of the policy. Clearly, Labour Members believe that the initiative will be successful and that it will
 generate huge benefits for pensioners. We have accepted that it will generate benefit to some pensioners, so we shall not rehearse that argument. However, on the assumption that it will benefit a lot of pensioners and they will take it up, the figures will show that to be so.
 My hon. Friend the Member for Canterbury (Mr. Brazier) will remember the story—as would a Biblical scholar—of Gamaliel, who said that if an enterprise is from heaven, it will be successful, and if it is not, we need not bother. That is the essence of what we are saying. Let us get the information out so that we know the figures. In deference to the hon. Member for Northavon, who is the social scientist among us and has a proper interest in the matter, as do we all, let us see whether we are getting value for money and whether the thing is working. That is the substance of the amendment. 
 It is fair to say that the other amendment is more speculative because of the complexity of working out people's behaviour on their pension provisions from the age of 15 onwards. However, we must know what happens about payments against entitlements—take-up—and whether the system has the success that Ministers anticipate. I do not think that that is unreasonable. 
 I pick up two points to share with the Committee. Some members of the Committee may have read a study of ancient languages and their texts—I recommend it to hon. Members who have not read it—which may be of value when understanding the pension credit. However, if hon. Members are really students of higher criticism, they will notice a slight difference of style in the text of amendment No. 19. The earlier part is more elegant because it was drafted by my hon. Friend the Member for Hertsmere, and the latter part is rough and ready because I drafted it. Broadly speaking, paragraphs (a) to (d) are in my hon. Friend's hand, and paragraphs (e) and (f) are in mine. I shall speak to those further. 
 Paragraph (f) states that the report should include 
''representations made to the Secretary of State by the Social Security Advisory Committee or by such organisations as may seem to him representative of the interests of pensioners in connection with the operation of state pension credit.''
 We are asking for what the social scientist would call a feedback system, whether on initiative or because of a request by the Secretary of State. That would allow the outside bodies that gave evidence to the Work and Pensions Committee and made submissions to members of this Committee to continue to monitor the situation. 
 That process would be iterative. If the Government publish a report one year with figures on entitlement and take-up, bodies such as Help the Aged and Age Concern could come back the next year and say, ''This isn't working very well. Our analysis suggests that this is the area that isn't as good as it should be.'' There could be dialogue and what car manufacturers call a policy of continuous improvement. The hon. Member for Basildon (Angela Smith) will remember that phrase because it used to be the policy of the Ford Motor Company—we both have plants with Ford involvement in our constituencies. 
 We accept that the situation is not perfect now, and I hope that the Ministers accept that. It is imperfect in several respects. However, even if it were perfect, we could improve it to an extent. Therefore, it is important that continuing dialogue exists. That is a matter of accountability, and forms an important part of the wider issue of the Government's shift to a credit-based philosophy. There is a suggestion that although benefits flow through the Social Security Advisory Committee in what may be termed loosely a time-honoured way, accountability and feedback would be less developed as we move to a credit regime. We want those to be taken forward. 
 Paragraph (e) mentions 
''details of the steps taken to encourage those entitled to state pension credit to make a claim for it, and of the steps to advise those making such claims''.
 That is the essence of whether the Government's wish to improve take-up will succeed and whether the delivery of the benefit through the Pension Service will be a success. If one wanted to give a short title to the paragraph, it would be ''Let's have a talk about the Pension Service''. The Ministers know that I have expressed worries about that in the past. 
 If it gets about in the Committee that we are trying to subvert the success of the policy, that is an absurdly overblown attribution of our power. We have no interest in doing that. We shall play it straight and try to tell people how the system works and, above all, not rubbish the work of the Pension Service or its officials. The Minister is blessed with some excellent officials who will want the Bill to work. 
 I mentioned the fact that the manager of my local Pension Service centre in Leicester has been proactive and has written to me to ask whether I would like to discuss the matter. I welcome that and will respond, and I hope that other Members will do so, too. 
 Our older constituents have an interest in receiving a proper service. That needs saying, and I am sure that everyone will do their best, including Ministers. However, both the evidence given to and the report of the Work and Pensions Committee show some major areas of concern. I do not want to widen the debate unduly, but the concerns flagged up in the report at least suggest that as part of the process of annual accountability there should be some reporting and feedback on that aspect, too. 
 The relevant sections of the Select Committee report show concern about the concept of call centres, with which many of us are reasonably familiar and comfortable. Just this afternoon I had to ring a service company about having my windscreen repaired, as a stone hit it. I went through the multiple choice, had to press 1 or 2 and hang on and was told to wait two minutes, very courteously—it is a high level of service, up to a point—and did not end up slamming down the telephone in despair. It went perfectly well, but it was a 10-minute, slightly stressful process, and could be broken at any stage. I am a little younger than a pensioner and my generation was taught to argue, make its case and fill out forms. It is not as easy for every customer of the Pension Service. The dynamics of relying on a call centre, especially if 
 there is no local access or adequate domiciliary visits, are important. 
 A subset of concern expressed in the Work and Pensions Committee's report relates to the natural first language of people from ethnic minorities. Until I read the report, I was not aware of the remarkable fact that there will be no call centres in the south-east. Its Pension Service will be located in Blackpool or thereabouts. Not many people in Blackpool are natural first speakers of ethnic minority languages and so able to match the 300 languages spoken in London. I am sure that the problem can be overcome and am merely telling Ministers that it is essential that it should be. 
 Ministers will be aware of past analogies and that considerable concern has been expressed about the robustness and reliability of the Department's computer systems. If any of them go wrong, there will be difficulty. My biggest worry, which I do not signal—I do not want it to happen—is that if the credit gets off on a bad foot, people will be discouraged from using the system and even applying for it. Take-up and other figures will tend to move down further. 
 Ministers are upbeat and optimistic about how the credit will work. I hope for their sakes and that of pensioners that it does. However, to counterbalance that, I quote Tony Lynes of the National Pensioners Convention, who, as is mentioned in the report, said bluntly: 
''No Government has ever before tried to means test over 5 million pensioners. The chances of that going smoothly seem to be extremely remote.''
 That is his conclusion, not mine, and I hope that he is unduly pessimistic. However, the potential for difficulty exists. The policies may not work in policy terms, and they may not be delivered in terms of the service's arrival or availability to those who need to use it. We all want it to work properly. No one who serves on this Committee has no commitment to the cause of pensioners. They constitute a huge interest in this country in terms of numbers, and many of our constituents. Many of them are still under some strain and pressure of income. That is not a matter that we need to debate; we need to ensure that they are looked after properly. 
 The series of changes to the system were, no doubt, conceived with the best possible motives and from a wish to get the system right; I am not arguing that Ministers do not want it to work. We now have the boring business of seeing that at work. If we are to find out whether it works and whether it has the social consequences that Ministers want, we need data and a system under which there can be feedback and discussion, and under which improvements can be made. That, and no more, is what we are trying to do through the amendment.

Julian Brazier: I shall give just one example of the myriad difficulties of means-testing 5 million pensioners: how is income to be treated? The Secretary of State may announce at the Dispatch Box, ''We said all along that income from work is going to be treated the same way as income from pensions'', but if the assessment is only five-yearly and
 the pensioner is doing a job in which the income varies sharply from week to week, how on earth is income from work to be treated? That question was asked repeatedly in another place at Committee stage and was never answered.

Peter Atkinson: Order. The question of assessment of income comes later in the Bill.

Tim Boswell: I bow to your strictures, Mr. Atkinson. Indeed, I was drawing my remarks to a close. The essential point, which goes wider than the Department for Work and Pensions, its Ministers and its policy, is that it is all very well to want things to happen—I would not deny that Ministers have a passion for them to happen—but we must get on with the job of checking that they work. If they do not, we had better level with everyone and think of a better way of doing it. We proposed the report framework so that there would be no doubt in the minds of Parliament about what is happening, what could and what needs to be done to improve matters, and whether Ministers have the will to do it. That is a basic prerequisite for putting the policy in place. That is an important part of our case.

Ian McCartney: Under the guise of the amendments, we have had an interesting general debate on the reporting of take-up, women, lack of incentive both to save and to make long-term savings in the private sector, means-testing, the Pension Service, and language and other services for those with special needs.
 I do not wish to stray on to the subject of clause 3. You are quite right that issues have been raised which come up in later amendments, Mr. Atkinson, but I am not trying to dodge questions. We are here to answer questions and to be accountable. If the hon. Member for Northavon permits it, I shall write with the answers to his questions. If I address my letter to the Chairman, every member of the Committee can have a copy. I can scoot into the Library or trouble you to photocopy it for them, Mr. Atkinson. I shall do that as soon as I can. 
 Having listened to Opposition Members for the past hour or so, I must say, so that we do not get too depressed, that on top of the 3.9 million pensioner households that gain from pension credit, another 700,000 households that will not receive the credit will gain from changes to housing benefit, council tax benefit, and the way in which capital is treated; higher applicable amounts will follow from the changes. This is still a good news story, but no one would think so from listening to members of the Committee. 
 Having created a massive pool of poverty, Conservative Members stick their heads in the sand. Up pop the Labour Government, and suddenly there are ways of resolving the problem. The matter is complex and difficult; we cannot simply write away poverty, and we cannot make changes to a complex pension and benefit system without difficulty. Simplification of the state benefit system and pension policy is a very complex thing indeed. One of the first 
 and most enduring lessons I have learned as the Minister for Pensions is how complex changes are, even when it seems right to introduce them. 
 Whatever happens when we challenge, change and modernise the benefit and pension systems, and whatever the relation between the public and private sectors—we have a very mature relationship in this country—none of us thinks that the changes themselves are not difficult. However, if we add to that the creation of a new Department, for the first time identifiably offering services for children, working age people and older people—bringing together 130,000 people who had never worked together before and galvanising them into new departments and agencies from 1 April—and if we add the new pension credit and other modernisation strategies, including the £1 billion plus investment in new technology to ensure that the scheme works even more effectively over time, we face a big challenge. I accept and understand that. 
 I also accept that the House and other institutions, such as those that represent older people, are entitled to scrutinise us and hold us to account. After all, the Department is not just providing a service for more than 1 million people a day. That service is paid for by taxpaying citizens and we have a responsibility to them. I do not duck any of those big issues—neither the complexity of the situation nor the need for us to be accountable. I shall come on to that in a moment. 
 I reconfirm that we are aiming for a take-up rate of 67 per cent. of eligible households during the first year to October 2004. That will mean that more than 1 million more pensioners will receive additional financial support than currently do under MIG. That in itself, as a first stage in the development and rolling out of the policy, is a major operation. Some 1 million more will be helped than are helped under MIG, and 2 million are helped under MIG who did not previously get any support. For the further hundreds of thousands who have had no support through council tax benefit or housing benefit, this is a major change, bringing more than £2 billion worth of benefit to older people. 
 On take-up, the hon. Member for Northavon is right that we could argue till the cows come home about interpreting figures, but we must have figures to interpret. I do not think it sensible to say that the figures look partisan—although I make partisan remarks, so I take such things on the chin—or that Ministers somehow rubbish their own figures. That is not the case. Ministers receive independent advice. The taxpayer pays for that advice and we are the custodians of it. It is not the case that that advice is given at any stage in a partisan way or in an attempt to influence anyone. It is therefore important to look from time to time, as we move forward, at the way in which take-up figures and other figures have developed. 
 We must get that right, so that social or any other type of policy can develop in a scientific way. There must be facts. That is more important in the area of poverty than in many other areas. Utilising figures should not be a yahoo game. The figures and information concerned must be seen from a non-
 partisan viewpoint. There must be a rigour to the research, a willingness for those whom the research is about to participate in it and a transparent analysis of that research. We should all operate on those principles, and that has not always been the case. I do not mean that the previous Government fiddled unemployment figures. However, it is important that those who create the figures are independent. This Government have brought about that independence. There must also be transparency. 
 It is important to get the figures right. That is why, some months ago, we and the Secretary of State had discussions with those who compiled the figures. Increasingly, they have said, of their own volition, that the figures on pensioners have been slightly unreliable, to say the least. The areas of tolerance are huge and growing, to such an extent that the figures are difficult for politicians, social scientists or those who represent pensioners to interpret. 
 It is important to get that matter right, so we are putting resources into developing ways of getting more accurate information, making the information transparent and encouraging older people to be involved in the research. That is a lesson for us all. If we are to have accurate information, older people must have the confidence to participate and we must encourage them to do so. In the end, the information must be of a nature that can be utilised to their benefit. Therefore, we all have a job to do. We must also come up with a better way of giving access to information on a regular basis. 
 I am enthusiastic about take-up; it is important to maximise it. In order to do that, the following measures will be taken. We will publicise the pension credit from April 2003 so that its availability is widely known among the eligible population. We will transfer existing MIG recipients to the pension credit, ready for payments to be made from October 2003. During the take-on period through to October 2004, we will write to all pensioners who are not already receiving MIG to alert them to their possible pension credit entitlement. Any who apply before October 2004 who are entitled to a credit will have payment backdated to October 2003. It is important to make that clear. 
 During that period, we will also work with local partners to help with communications to pensioners, and we will constantly review take-up and tailor our marketing and communications activities accordingly. We will review take-up during autumn 2004 to plan further necessary activity. 
 Earlier in the debate, when I was asked by the hon. Member for Daventry about having discussions between Members and officials in the run up to the introduction of the pension credit, I said that I would write to them in a positive way. If it helps, in addition to that and as part of the process, I am happy to take ideas from Members about their locality and generally about the way in which they would like us to develop pension credit take-up services and our campaign strategy. I would welcome that.

Tim Boswell: I welcome the Minister's tone. The matter is important, and I stress that we have a common interest in ensuring that things work as well
 as they possibly can. Will he particularly bear in mind the importance of non-governmental organisations such as pensioner groups and other groups—he has already given them credit—not merely in facilitating the Pension Service, if not acting as delivery agents, but in providing ideas and examples of good practice to the Pension Service?

Ian McCartney: Part of our core activity is to develop working relationships and partnerships with older people's organisations in respect of the development and roll-out of the Pension Service, and older people's issues generally, such as better access to public services. Furthermore, in the development of future policy on income and services, we have established several groups that have already begun meeting to tackle the issues, including a forum to deal with poverty. At every level, official and political, we involve all the groups that we possibly can and make them partners with the Department.
 That is not happening just at national level. With the roll-out of the Pension Service at regional level and at local level in particular, much of the activity is being focused on the output of the local service. During the next few years, the structure of a meaningful local partnership will include the involvement of local pensioner organisations in all instances, because it is important that we take the Pension Service to the pensioners rather than asking them to come to the service. There will be a change of ethos and strategy in the management of the service and the way in which staff work in the community with older people in relation to take-up of pensions and other services.

Steve Webb: There is one thing that I have been trying to pin down about the way that the Pension Service will work. In principle, pensioners can go to a Benefits Agency office the day that they want to talk to someone in the Department for Work and Pensions. Although I see the attraction of going to the local library on the third Thursday in the month for an Age Concern session or whatever it might be, clearly, that is much less flexible and responsive. Will the Minister clarify what the arrangement will be if someone does not want to pick up the phone but, being fit and well, wants to go out of their home? How soon will they be able to see someone face to face?

Ian McCartney: They can do that now, and they can continue to do that. I have seen a letter saying that that is not the case. However, it is absolutely the case. We are offering additional services in the community because our research shows that older people do not like to visit old-fashioned Benefits Agency offices, and we have to respond to that. It is not that we are taking a service away and saying, ''You can have this, and that is all.'' It is about people being able to visit the Department—and, if they do not want to do that, the Department will come to visit them. Such meetings might take place at a local luncheon club, or at Age Concern's local office, or in joint action with the local authority. Currently, a pilot project of Care Direct is giving single gateway access to older people and their carers to a range of services, and we want to build on that concept.
 As the new service rolls out, it will become possible to see many more older people in their homes. Many such people are isolated because of age or infirmity. They lose out too. It is important to release officers' time, so that they can be visited in their homes. 
 That links up with something else that the Government are doing in primary care. We are increasingly getting the primary care team to work with other professionals, so that people's health and social care and financial well-being can be looked at as a total package. That is the principle behind the concept. It will not be realised immediately—in the next few weeks or months—but we must have ambition and an idea of where we want to take the service.

Tim Boswell: The Minister mentioned that there were letters flying around, and he will be aware that the Public and Commercial Services union itself is one of the organisations that has expressed concern. I do not wish to suggest to him that he should conduct industrial relations negotiations through Members of Parliament or other third parties, or that he should seek to produce such partisan literature. However, he did seek to suggest that some of the stuff that is going around about the withdrawal of personal interviews was not properly conceived, and I must say that I am beginning to receive correspondence from constituents who are saying that they are worried that they are not going to have the opportunity to have personal access to benefits offices, and so forth. Before that tide begins to run, and bearing in mind the sensitivities about the subject—which I respect—will he give some consideration as to how he might communicate with us? Some of the things that he says in the Committee might also need to be said to colleagues outside the Committee Room, so that there is no doubt as to where the Government stand on this.

Ian McCartney: As a former trade union negotiator, I do not intend to negotiate in a forum that is unrepresentative of the unions.
 To be serious, I have a good working relationship with the PCS, and I intend to maintain that. It has been very helpful with regard to the change. Let us be honest: the change has been great, and it is legitimate for it to voice concern and to seek assurances about issues, particularly with regard to those who work in the Pension Service, which is one of the most stable work forces in the Department. People who come to work for the Pension Service tend to remain there. It is a highly skilled and motivated workforce, so we want to maintain a good relationship with it. 
 It is true that, in the campaign that is being put across to maximise the potential for negotiation in the new Department, some things have been said that are not only technically incorrect, but incorrect in terms of the entire concept. We have sent out information to hon. Members. I intend to send information to them regularly about pension centres in their areas. We have already sent out information about the new officials in particular areas; so, on a rolling programme basis, hon. Members will get information. If any hon. Members become concerned or worried because they 
 have received letters such as those that have been mentioned, I will provide them with a letter that effectively explains matters, which they can give to their constituents.

Annabelle Ewing: I have listened with interest, in particular to the exchanges about the recent lobbying and the concerns of some members of the PCS and increasing numbers of pensioners. Is the Minister saying that there is no foundation to the concerns that have been expressed by this union? Are greater resources required to implement the kinds of schemes that the Minister was talking about? If so, will those resources be made available?

Ian McCartney: The hon. Lady is trying to draw me into discussions with the PCS in a different way.
 I can only say that the resources are available in spades for the new Department, as the creation of the Pension Service and Jobcentre Plus shows. It is the biggest investment in the welfare state—in its structure, its communications, its staff and staff well-being, in their working environment and their skill match and mix, and in their change of skill mixes and opportunities. There has never been a better time and place to work in the public service than there is now at the Department for Work and Pensions, and we intend to maintain good working relationships, particularly in the aftermath of the correct decision by the union to accept the decision. 
 The offer with regard to Jobcentre Plus was made some time ago. It is about working with staff, and staff at a local level working with the local community and other groups. The creation of the Pension Service is a good news story all round for both staff and older people. 
 The MIG take-up campaign was pooh-poohed. One complaint was that it was a waste of public money and was only an attempt by the Government to promote their policies. There is nothing wrong in doing that if such policies enable people to get out of poverty. Anti-poverty is a reasonable policy to promote. It was also said that, because of the complex nature of the initiative, older people will not apply for it. Both complaints were wrong.

Patrick Mercer: If that is the case, why are only a quarter of those eligible claiming it?

Ian McCartney: That is not the case. I accept what the hon. Gentleman is saying in the sense that more people are entitled to the minimum income guarantee than those are who are receiving it. That is why we are trying to improve the uptake of MIG in advance, after which time we will try to improve the uptake of pension credit. We are not arguing about that. A legitimate question is how we will sustain a campaign, which is why I have explained the first part of the phased programme.
 The substantial MIG campaign resulted in more than 128,000 additional individuals receiving it. On average, they are receiving £20 a week more than they received before the campaign. The interesting aspect is that, if we provide older people with access to a friendly environment, they will apply for their entitlements. They will use the telephone. They will 
 respond to specific campaigns in the community. It will not be a system in which older people will not take part. Increasingly, they have a great deal of knowledge and want to have such relationships within the community. People now apply by telephone for their basic state pension. The system will be so easy. Let me leave aside those who will benefit immediately and who are already on MIG. They will be transferred automatically to the system and will not have to do anything, and rightly so. In the four months running up to retirement, when people can make applications for their basic state pension—as they do now—they can apply at the same time for pension credit. 
 There will be two elements to the basic income from the state that people receive on retirement. That will be a major change for the good. Because of the new technology and the new skill mix at the Pension Service, application can be made by telephone. If people do not want to do that, we can provide home visits and other environments in which applications can be made. We will give older people a choice. Under the old system, they could either visit an office and sit in an environment that they did not like or sit at home and receive nothing, because no one bothered whether older people made applications. That situation will change dramatically. I am talking not about individuals, but the bureaucracy of the system. 
 When the system operates effectively as an advocacy organisation on behalf of older people, matters will be transformed immediately. I am not exaggerating about the cultural and organisational change that will take place. Five years from now, when compared with the new pension system, the old system will not be recognised. There will be a five-year rolling programme of improvements. As people come to retirement age, they can make application for pension credit by telephone. They can receive basic information. We have had a debate for an hour and a half. There is a ready reckoner on the back pages of the pension proposals. I am not saying that matters are easy, but we will be providing simple and quick access to information. 
 The stress of making an application under the old system will be taken off individuals by the state, which will act on their behalf. The system will be vastly different from the old-fashioned ways of communicating with older people, different from the days of the poor law and different from the complex systems that operated in the '50s, '60s, '70s, '80s and the early part of the '90s when the income support system was made up of complexities. Each system was another layer of bureaucracy and regulation. Some layers were added for the best of reasons; some were added to undermine people's access to benefits. Whatever the reason, we inherited huge complexities. The purpose of the Bill is to get rid of as much complexity as possible on behalf of older people. 
 A question was raised about women. I say from the outset that I have robust, open and frank discussions with older people's organisations about whether the current state pension system is beneficial to every citizen in the country. A range of people paint the rosy picture that all we need to do in order to resolve everything and end poverty overnight is to add extra 
 cash—£2 billion, £3 billion, £4 billion or £5 billion; whatever case they want to argue for—to the basic state pension. 
 Of course, the problem with any public or private pension system is that it is a compromise. The compromise of the state pension system was worked out by liberal academics and left-wing Labour politicians as we left the '40s and moved into the '50s. It was designed using that fact that men coming out of the war years had an average life expectancy of 61 years—they qualify for the pension at 65. 
 For a range of reasons, the vast majority of women did not have a work record. That began to change only after the war. Women were not entitled to a basic state pension; they had to rely on a marriage. If a woman was not married—large numbers were not—she was on her own. Of course, the system did not take account of people's caring responsibilities and intermittent work records. The only universal thing about the basic state pension was that everybody had the right to apply for it. However, nobody had the right to benefit from it. If we are to break into the cycle and deal with poverty and the fact that we have a system that is discriminatory, we must be serious about the changes that we make. 
 The biggest recipient group is women. Many women have small occupational pensions and will benefit from the reward. About 300,000 single women over 65 have a form of occupational pension and are eligible for the minimum income guarantee, and 92 per cent. will be rewarded when the pension credit is introduced. A further 400,000 women outside the range of MIG will become eligible for the rewards. Over 700,000 single women will be rewarded for their savings because of the pension credit. The largest recipient group of pension credit—over 53 per cent. of people—will be single women. They will be the greatest beneficiaries of the change. We are challenging the structure of the old basic state pension, which ruled out so many women from receiving it.

Tim Boswell: I thank the Minister for setting out several positive aspects of the Bill. Undoubtedly, some women will benefit from the credit. However, he also said in his historical exposé that many women at the time that the system was devised were not expected to work. Many subsequently had extremely broken work records and served as carers. Such people would have an incomplete entitlement to the state retirement pension when they retire. Owing to their inadequate contribution record, they need all the savings that they have to make themselves up to the minimum income guarantee before they can avail themselves of any benefit. Many women will not benefit from their savings.

Ian McCartney: We shall return to that when we consider clause 3. However, over 53 per cent. of people who will be entitled to pension credit are single women. The hon. Gentleman cannot get away from the bottom line. Over a quarter of those who will claim pension credit are women over 80. The hon. Gentleman cannot escape the fact that the Bill represents an important policy change that benefits mainly women.

Tim Boswell: I do not disagree with that. However, will the Minister concede that if we examine the overall population of pensioners—those in receipt of the state retirement pension—the proportion of women in that total is higher than the 53 per cent. who he claims will benefit from the pension credit? If that is the case, is there not a disproportionate under-representation of women among the total population receiving the pension credit? It is less skewed towards them than is the total number of retirement pensioners, where the preponderance of women increases considerably.

Ian McCartney: Sixty per cent. of women over 80 will be entitled to the credit. This is the first major policy change that benefits women in this way. If the hon. Gentleman believed that that was the case during the 18 years that his party was in charge of the basic state pension, why did he not do something about it? The Tories allowed women to languish. Many women did not get a state pension, but income support and income support rules and the tapers that existed meant that they lost everything. They had no gain at all from any kind of income, even if they had a small income that they might have scraped together. The Bill at last recognises and puts right a big wrong. I am not apologising for it.
 To return to what was said about the Association of British Insurers, its report is very interesting, and is overwhelmingly supportive of the Government. The area in which it shows concern is also an area of ongoing policy work. No doubt that will be debated in the autumn, certainly by those who speak from the Front Bench for their respective parties. At that time, we will be examining the Sandler and the Pickering reviews, and the second state pensions and stakeholder pensions will begin to kick in. The policy cannot be viewed in isolation; it is part of a range of measures to develop pensions for today's and tomorrow's pensioners. 
 It is important that we get the regulatory regime's incentives right. I would not disagree with that. For the first time in a long time, we have a Government who are prepared to take a long-term approach to the issue. They are prepared to consider the relationship between the public and private sector, and the impact of the regulatory regime on incentives to save, on employers to make a contribution, on benefit contributions and on all those people who are outside any form of pension plan but are employed on a regular basis. Stakeholder pensions are designed to assist those people. Then there are the 18 million people whom we would let down if we did not introduce a state second pension. If we did not do so, we would replicate the mistakes of previous generations of excluding large numbers of citizens from a pension because of intermittent work records, such as women who are carers for people with disabilities. We are thinking about the future as well as the present. 
 The hon. Gentleman raised several issues concerning amendments Nos. 19 and 20. It is important that I give a response. I have given enough airing to the timetable for the Pension Service and what we are doing. If hon. Members 
 want more information, I am happy to provide that at a later date. 
 Together with the regular publication of claims data and estimates of take-up, the reporting requirements that apply to the Department as a whole can allow the publication of all the information that is required by the amendment. The Department will continue to present its annual departmental report to Parliament. That will provide a comprehensive picture of performance across the whole Department. The report will provide an account of departmental performance against its public service agreement objectives—an innovative approach adopted since 1997. It also provides an account of how the Department has expended money voted to it by Parliament. As an executive agency, the Pension Service will be required to produce a separate annual report and financial accounts must be laid before Parliament before each summer recess. The report must contain details of performance against key targets for the year. Hon. Members said that they would want one target to cover how many people have access to pensioner credit. That is one of the major components of the work that is being done by the agency. The report will include other internal objectives and performance measures. 
 Amendment No. 20 would require an annual report to be laid before Parliament setting out the effect of pension credit on individuals' incentives to save for retirement. That goes to the heart of much that the hon. Member for Daventry said. As far as savings incentives go, pension credit must be seen against a much bigger picture including the state second pension, stakeholder pensions, ISAs and the supporting tax regime, which are all geared to encouraging savings for retirement. 
 Pension credit is fundamentally different from the benefit regime that we inherited. It is principally about fairness. We are doing away with a regime where pensioners saw no additional income from saving, as benefit was clawed back pound for pound. It was not only unfair, but created a severe saving disincentive for people who were likely to qualify for the minimum income guarantee when they retired. By contrast, under the credit individuals will see a 60p increase in their net income for every pound that they save. It will be worthwhile to save under the credit, and the results, in terms of a net increase in retirement income, will show that. 
 Our strategy is based on three foundations: creating the right environment for saving, providing the right incentives and ensuring that people have access to clear, impartial information that educates them towards greater financial literacy to support their making the right saving decisions. I assure the hon. Gentleman and other members of the Committee that it is in the interests of the credibility of my Department, the new executive and all those who work with older people to ensure that the reporting mechanisms that we put in place are not reporting mechanisms in name alone, but give effective and transparent information. I assure hon. Members that that will be the case. 
 The amendment was well placed to seek that information. There will be robust ways in which reports will be made both inside and outside the House. I hope that the hon. Gentleman will withdraw the amendment.

Julian Brazier: In the Minister's lengthy reply, he took the trouble to make a number of detailed points, on which my hon. Friend the Member for Daventry will no doubt be commenting in a moment.
 In a brief contribution, I should like to say that although the Minister spent a lot of time commenting on amendment No. 19, he said very little about the substance of amendment No. 20, which relates to disincentives to save. They are both important amendments, but to my mind amendment No. 20 goes to the heart of what is wrong with the Bill. 
 The only serious criticism of amendment No. 20 came from the hon. Member for Northavon in an otherwise excellent speech. He was, however, mistaken on one point. He suggested that what was wrong with amendment No. 20, unlike amendment No. 19, was that it would not produce any valuable information because it was impossible to tell whether there was a disincentive to save as a result of any one particular measure. As disincentives to save in the case of pensions can in principle apply to people at all ages in the spectrum, and many other factors affect people at all ages in the spectrum, superficially his point might appear to be right. 
 I want to give a specific historical example to prove why that is wrong, providing that we segment the study by age. Lest anyone thinks that I am making a party political point, let me point to a mistake by a previous Conservative Government. In 1988, we brought in a measure that introduced very strong disincentives to save, namely the decision to capital test rather than just income test the arrangements for income support for pensioners. For my sins, I wrote a paper at the time saying that that would have a disastrous effect on savings retained by people who had reached retirement age. 
 Six years later, I was smug enough to publish a second pamphlet that included a graph, which I took the liberty of showing to the hon. Member for Northavon. It would be out of order to show it to the Committee, but I shall tell hon. Members what it contains. A form of measurable disincentive to save occurred as a result of a measure that dramatically extended the bite of means testing to large numbers of pensioners. Because it was combined with an increase in the provision for income support, it did so in almost exactly the same way in which this measure will extend its bite. 
 I shall make a final historical point before I develop my argument. We have heard arguments about how pensioners may not immediately see the economic consequences of their actions. The decline in the proportion of people living on income support—a process that continued for a generation—has been turned round. During the three-year period between 1991 and 1994, the proportion of pensioners reliant on income support rose from around 12.5 per cent. to just over 15 per cent. 
 It would be deeply patronising to suggest that pensioners cannot do their sums. The overall effect of the measure will be to extend means-testing so far up the income range that before long, according to the Government's projections, it will embrace more than half of them.

Maria Eagle: I am listening to what the hon. Gentleman is saying, but I have not had the advantage of seeing the pamphlet and I am sure that he will lend it to me. Does he not welcome the simplification of the capital rules that the Bill introduces?

Julian Brazier: Let me explain why not, in so far as I can while remaining in order on a narrowly drawn amendment. In arguing the case against the measure—savings take-up is central to the whole case against the Bill—I want to be clear on one point lest there be any mistake. I wholly share, as does my party and, I am sure, the Liberal Democrats and the Scottish National party, the underlying objective that the Government claim to have in the Bill: to reward those who save but feel that they miss out because of the way in which means-tested benefits work within the system. The problem with the measure falls into two parts. My hon. Friend the Member for Daventry alluded to both and the hon. Member for Northavon alluded to the first.
 The point was made from the Conservative Front Bench, not only by my hon. Friend the Member for Daventry in Committee, but on Second Reading, that the minimum income guarantee itself has sucked a huge number of people into the problem and has pushed it well up the age spectrum. All the figures we were given about a £100,000 pension fund being required just to balance the value of the minimum income guarantee and so on apply. 
 The second and more narrow point that concerns us—the reason for the amendment is to show the impact on saving—is that more than half of the pensioner population will come within the remit of the Bill. As my hon. Friend the Member for Daventry explained so compellingly, the problem is that if a steep taper is put into the Bill, side by side with the taper that is provided by taxation, the taper provided by housing benefit to such a large proportion of recipients and the taper provided by council tax, people will see immediately that, if they had not saved during the last years before their retirement and had chosen to spend their money on other things, the proportion lost would be very little. 
 I do not want to repeat the incredibly good opening speech by my hon. Friend the Member for Daventry in which he quoted different bodies which illustrate these points and which have been through the figures. I leave the Committee with one final thought: does anyone remember a measure—I cannot in all the years that I have been in Parliament—that offered to hand out large sums of money to an extremely worthy group of people but which met with so few welcoming voices? The least we can do is to measure its impact.

Andrew Selous: I also want to speak briefly to amendment No. 20. I concur with the comment of my hon. Friend the Member for Canterbury that we did not hear much from the
 Minister about the amendment. I believe that he broadly welcomed its intention, but he tried to tell us that there were other means whereby the Department would seek that information.
 The Government have said that they want to move from the current figure of 40 per cent. of funded pensions to 60 per cent. Opposition Members thoroughly support them in trying to attain that. That is even more important given the accelerating demise of final pension schemes. 
 I shall focus on a comment in paragraph 32 of the Select Committee's report, in which the Committee said that it hoped that in future it would always pay to save. Because of the complexity of pension legislation—I am thinking especially of the task facing independent financial advisers and others; some of my constituents recently contacted me to explain the difficulties that they face—rlwe need clarity. 
 My hon. Friend the Member for Hertsmere described the four categories of people for whom we cannot say that it always pays to save. Amendment No. 20 is important. The first is those with less than a basic state pension. Information from the Department is that 12 per cent. of retiring men currently do not have a basic state pension. However, 75 per cent. of retiring women do not have a basic state pension and will therefore fail to benefit from the savings credit in the Bill. Women aged between 60 and 65 currently number 1.5 million, a figure that it is anticipated will rise to 2.2 million by 2031. They are a second major group that has no incentive to save under the Bill as currently structured. There are more than 3 million self-employed people who, because they do not fall within the ambit of the state second pension, suffer a disadvantage in being unable to benefit from the savings credit in the Bill. Even for those who save £50 a month and are entitled to the savings credit, for the first 10 years or so, there is no benefit. I hope that amendment No. 20 highlights the suggestion in the Association of British Insurers submission that there might be a disregard for the first £10 of saving income. The graphs in its submission to the Select Committee show that if there were, it would always pay to save. 
 Those issues are important. As the ABI and my hon. Friend the Member for Daventry said, the savings gap is currently £27 billion. The Government have rightly said that they want to move to a ratio of 60 per cent. private occupational funded pensions, reversing the current ratio. We shall not achieve that unless it can be said with clarity that it always pays to save. 
 I refer to the recommendation in paragraph 32 of the Select Committee's report. We recommend that the Government devote time to looking into the cost of the measures. It is, perhaps, worth noting that we do not know how much the Bill will cost. As Parliament, we have passed the Bill with various scenarios, but we do not know exactly what the total cost will be. The Select Committee has been slightly more cautious and 
 has asked the Government to look into the costs of the four measures that I have described.

Patrick Mercer: I shall concentrate on amendment No. 19, which has already been spoken to at some length. I hope that I shall not labour the points too much. The amendment has been carefully drafted by my hon. Friends the Members for Hertsmere and Daventry.
 Although the Minister gave a sterling response to all the points that have been made, the amendment has the merit of casting light on a subject that is otherwise often obscured. I shall quote extensively from evidence from Help the Aged, which may provide one or two points that will help us. The minimum income guarantee is one of the only means-tested benefits with which we can compare what is going to happen to pension credit. Clearly, pension credit has no track mileage or precedent on which it can yet be judged. The MIG is probably a helpful yardstick. Despite a very expensive television campaign, it is still clear—I bow to the Minister as regards the precise figures—that much of the funds available are not yet claimed. 
 I take issue with the Minister about the complexity of claiming pensions and benefits. That is something that I hear about frequently in my constituency surgeries. Indeed, every time I go to Tuxford, the same point is made. Those who are most vulnerable—pensioners who are most reluctant to get involved in the bureaucracy and the complexities of applying for benefits more often than not—will say, ''Mr. Mercer, I am extremely concerned about over-applying. I would rather not apply than get paid too much benefit, then have to pay it back at a later stage.'' I have heard that three or four times—I do not pretend to have the answer. I am aware that there is ''attitudinal resistance'', to quote the report, among many of the pensioners to whom I speak about such bureaucracy. I commend amendment No. 19, which I hope would help to clarify that, and allow us to check as the new benefit comes into place.

Maria Eagle: It is interesting to hear what the hon. Gentleman said. Obviously, we want to encourage take-up. Would he accept that that concern is likely to be less when one has a five-year assessed income period, during which income is allowed to go up without affecting benefit, as opposed to a weekly means test, which was designed for income support for people of working age?

Patrick Mercer: I am grateful for the intervention. I probably would accept that, but the point I am about to make is that if the Department for Work and Pensions were to set targets for the level of take-up, rather than the current vague notion, that would help and might overcome the problems that I have just mentioned.
 The attitudinal resistance that I mentioned is reflected in that 25 per cent. of those who were told that they were eligible for the minimum income guarantee but would probably still not claim. The introduction of pension credit will bring several more millions of pensioners into the means-tested programme: 
''This new group will be more likely to have occupational and private pensions and, therefore, may be less likely to see themselves as the kind of people whom benefits are aimed at, or to assess themselves as eligible. Because wealth as a pensioner is strongly linked to wealth during one's working life, they are less likely to have had dealings with the social security system in the past.''
 Negative perceptions, and unfamiliarity with claiming and the claims process could therefore be higher in this new group. That is what Help the Aged has to say about it, and that is my impression at the moment of the new benefits that are being introduced. 
 There is also the question of those people who have applied for the minimum income guarantee. The campaign had a mixed result—we have heard from the Minister that it was highly successful—but when it went out, many applied having taken the advice offered and were turned down. That has probably built a resistance into those who will be claiming pension credit; having failed in the past will make them less keen to claim again in future. The Government also say that the pension credit will bring £2 billion into the hands of pensioners. However, already £2 billion of means-tested benefits is not taken up annually: 
''The reality is that much of this £2 billion worth of pension credit will never reach pensioners' pockets and will remain safely back in the Treasury. However, the administrative costs both ongoing and of introducing the pension credit will, undoubtedly, be very high.''
 One must consider the costs and benefits of the introduction of pension credit from the first principle. 
 It would be helpful if the Department for Work and Pensions were to set targets for take-up by 2004, the first year when the benefits will be active. Currently, we are told that a target of 67 per cent.—only two thirds—would be ambitious. Amendment No. 19 would assist considerably. It would make visible a problem that has beset other means-tested benefits in the past. It would be helpful, give clarity and, overall, save money.

James Clappison: The debate has been useful and interesting. As we had to, we touched on subjects that we will come to later but that were relevant for the purposes of the amendments, such as take-up, savings and so on. I am grateful for the support and interest that the amendments have attracted across the Floor and in other quarters. They certainly stimulated a lively debate at times. The hon. Member for Northavon fielded several interventions with good grace, in a non-partisan way. Clearly, the interventions were evidence of the Committee's interest in the amendments.
 I am grateful to my hon. Friends the Members for Daventry and for Canterbury for their contributions. I was not hitherto aware of the pamphlet of my hon. Friend the Member for Canterbury. I will take it away and study it in detail. I am also grateful for the excellent contributions of my hon. Friend the Member for Newark (Patrick Mercer) and my hon. Friend the Member for South-West Bedfordshire (Andrew Selous), who spoke with the authority of someone who was a member of the Select Committee, who had witnesses appear before him and who was able to ask them questions. 
 The Minister made a lengthy reply to the debate. He will understand that I shall want to consider in more detail many of his comments about the measures that his Department is already taking and about forecasts for the future. However, two points remain in my mind. 
 First, if the Minister and the Under-Secretary are so confident about take-up, why are they so reluctant to countenance a report that would highlight it and set it out? The argument is not about whether there will be high take-up but about whether there should be a report. Surely, with the degree of confidence that they have ventured this afternoon, Ministers would welcome a report that gives so much detail. The Minister said that, in any case, the information would come out in other places; I have heard that reply before. It may well be the case—it is something else that I want to consider in detail—but why not have a report that specifically highlights the issue and brings to public attention a matter that we all, apparently, regard as important? I am not convinced by the arguments against such a report that I have heard so far. 
 The second point is about savings. The Minister did not deal in as much detail with amendment No. 20 on savings as he did with amendment No. 19, but I heard him say that it was worth saving with a pension credit. I believe that he put forward that proposition in the sense that it was more worth while to have saved than to have no savings at all. That may be the case, but he did not address the question that was raised by the Association of British Insurers: is it sufficiently worth while to save, given the rewards that will come after the withdrawals? Is that sufficient to encourage people to save earlier on? That is a separate subject, on which expert opinion is divided. 
 The Minister may want to reflect upon the ABI's conclusions. He spoke about what it had said in broad terms. I invite him to look at the conclusion of the most recent memorandum that it submitted in evidence to the Select Committee, which is the final conclusion that it reached on this question and, indeed, on the whole subject. It says: 
''In order for it pay to save in all circumstances, these issues must be addressed before the State Pension Bill passes on to the Statute Book. Failure to do so would leave a proportion of the population vulnerable to not getting value for money for their hard earned savings, and potentially more damaging discouraging many people to save when it is in their best interests to do so.''
 We think that it is in people's interests to save. We want to do everything that we can to promote that and will look very carefully at anything that expert bodies think might possibly discourage saving. The Minister will be aware of the separate line of analysis pursued by the Institute for Fiscal Studies, which comes to a similar conclusion. 
 If the Minister wishes to respond to that, perhaps it will be convenient for him to do so at this stage, before I come to my concluding remarks.

Ian McCartney: I have a very good working relationship with the ABI. It says very little about pension policy, in terms of the strategic approach towards pensions in both the public and private
 sectors, that I disagree with. What the ABI says on this matter is, quite rightly, that it always pays to save. Until the pension credit came in, that was not the case. We had the absolute opposite—a major disincentive to save. There was a proposal, as part of the strategic approach, for a £10 disregard of the savings above the basic state pension. However, for many people, the first £10 of income above the basic state pension is made up of other national insurance benefits such as the state earnings-related pension scheme. The disregard does not generally affect additional savings above the national insurance contribution. Therefore, although that was a reasonable idea, it is already taken account of because of the structure and changes that have been made.
 There are resources to be utilised. The Government have made major improvements, some £0.5 billion worth, in terms of access to council tax benefit and housing benefit. Those changes are quite significant. As well as looking after those who can qualify for a credit, the legislation must be balanced to go that extra mile, and help those outside the credit system by providing additional resources through housing benefit and council tax benefit. 
 We are expanding the opportunities for people to have an incentive to save, rather than there being a disincentive to have small savings. I accept that there are choices for people to make. That is the choice that we made. However, we support the overall principle that the ABI states, that it pays to save. As I said earlier, when Mr. Atkinson was in the Chair, some time in the autumn we shall have significant discussions on the outcome of the Sandler and Pickering reviews. They will get to the nub of the long-term strategy that the hon. Member for Hertsmere is talking about—the strategic approach to savings and a regime in which people will save for their retirement, both as individuals and as employees with their employers. The pension credit resolves that issue in one sense and one sense only—for the first time, it takes account of, and gives rewards for, people making the commitment to save. No doubt we shall come back to some of the figures and discussions later, but that explains the point about the ABI. 
 I repeat something that I said to the hon. Gentleman. I went to great lengths to show what measures are in place to make Ministers accountable and what improvements we want to make to ensure that the information for which we are accountable is more reliable and more transparent. I give another commitment: there will be a research programme to evaluate pension credit. That is also important. We are putting in place evaluation programmes. We are putting in place measures to ensure that Parliament, the Department and the agencies involved have a strategic approach to putting information in the public domain. 
 In their first term, the Government instituted the third pillar of the policy, which I set out in my response to the Committee. We set down targets properly to evaluate in each Department whether we were achieving the objective set out, in terms of the 
 Government's strategic approach to the implementation of particular policies—in this case pension credit. Those pillars are all in place and will be effective. 
 The fourth pillar is the accountability of the House. Ministers can be brought to account, whether that is in Select Committees, the Chamber of the House, Westminster Hall, or during Question Time. Ministers will remain accountable in all circumstances. If I want to ensure that all those pillars are in place for effective communication and the placing of information in the public domain, I operate in an effective and transparent way. That is why I told the hon. Member for Daventry that I was taking on board what he said. I was not trying to tell him, ''We will do it your way''—it is far broader than that. I am linking pension credit to the Department's broader strategy, and I want to report it through that strategy.

Bill Tynan: Does my right hon. Friend agree that amendment No. 20 demonstrates a lack of confidence in and understanding of working people? Opposition Members seem to believe that if a benefit exists, it will deter someone from saving for old age. My view of working people, from a perspective of knowing them, is that they are more interested in saving for retirement than adopting a position where they will not save for old age if there is a benefit. That is not a practical situation as regards working-class people.

Ian McCartney: I thank my hon. Friend. I would ask him to be less of the old friend and more of a middle-aged friend. He made two points and they were both correct. It is important that people have incentives to save, whether they save with a personal pension or an employer. There is a certain security about that, which is why it is important to have a regulatory regime that is not a disincentive for employers to invest, and that has products worth investing in. The security of those investments is vital. There is a play-off between the tax and benefit regime and public sector pension policy, and its relationship to private sector pension policy. The United Kingdom, along with our colleagues in the Netherlands, has probably a more sophisticated public-private partnership in pensions than any other country in Europe. That is a long-standing mature relationship, but it needs modernising.
 The other point that my hon. Friend made is absolutely true. The overwhelming majority of working people do subscribe to working hard, and they have an opportunity to save. The problem in the system that we inherited is that there was a 100 per cent. disincentive. People lost every pound that they put away, when trying to access additional income. We are resolving that through pension credit in a very effective way.

Steve Webb: When the Minister was running through his four pillars, the third one concerned targets for the Department. It struck me that the fact that the Department has targets at present backs up the need for amendment No. 19 because the Government do not have a specific numerical target for the rate of take-up of income support pension credit. There is no notion of ''it is now two thirds, we want it to be three quarters'' or ''it is three quarters and we want it to be
 four fifths''. That is the sort of target that we want, and amendment No. 19 would bring that about. The Government have general targets—more money for poor pensioners, or whatever—but not the specific target that the amendment would bring about.

Ian McCartney: That is very interesting. A year ago, I remember that the Government were lambasted by Conservative Members for having too many targets. It was an absolute burden—targetitis. You can't win, can you? They moved the goal posts.
 I thought that I made it quite clear to the hon. Gentleman, without reading any notes from officials, where I was coming from regarding transparency and the importance of the Pension Service giving a clear indication of where it is going regarding the uptake of pension credit and developing its role. We have ambitions for pension credit. It is a good policy, and we want to maximise the number of those who are entitled to it. I ask the hon. Gentleman to trust me on this, if he can. If I prove to be untrustworthy, I have no doubt that he will tell the House in no uncertain terms that that was the case. If he is setting out to ensure—if I have got it right—that the Department's targets for the Pension Service are to make the policy more effective, that is true. If he is asking whether the targets that we set look to the objectives that the Department has set itself, that is also true. I made it absolutely clear in my earlier remarks how that relates to the Treasury, and how we will implement the spending programme in a transparent way.

James Clappison: I am grateful to the Minister for that contribution, which covered a number a points that I will study in detail. He says that it will pay to save as a result of the pension credit, but he will be aware that it is the existence of the minimum income guarantee that made it not worthwhile to save in the first place. It is common ground that anybody, whatever their background, in the appropriate thresholds will be aware that losing 100 per cent. of their savings from their benefit is not an incentive to save. The whole purpose of the savings guarantee that the Bill will put in place is to remedy the problems that the minimum income guarantee is creating by way of disincentives. That is the nature of the problem.

Maria Eagle: That is no different from the situation in respect of income support that existed for pensioners before the minimum income guarantee. The hon. Gentleman seems to be complaining about the fact that the Government have put in a higher level of support through the minimum income guarantee. How can he complain about giving pensioners a decent minimum?

James Clappison: I am trying to do justice to the Government's case because they were aware of the problem and have tried to do something about it. I am examining whether they have gone about it in the right way. I do not want to go back over the points about the difference between income support and the minimum income guarantee, but the hon. Lady will be fully aware that the minimum income guarantee is now much higher than the basic state pension, and it is likely to get higher still. As matters stand, it would not pay to save with the minimum income guarantee without a savings credit because there would be a 100
 per cent. rate of withdrawal. The hon. Lady will accept and appreciate that point.
 The question is whether the pension credit goes far enough in creating an incentive to save. The Minister referred to the treatment of housing benefit and council tax benefit, but the analysis carried out by the Association of British Insurers made a favourable assumption from the Government's point of view because it disregarded that potential disincentive. It looked at the disincentive for saving caused by a 60 per cent. rate savings credit and the minimum income guarantee. Having looked at everything that is known, which is important because it knew all about the Government's proposals, it concluded: 
''Most importantly, under the current proposals it is not true to say 'the pension credit will make sure that it always pays to save'.''
 I am sure that it said the same thing to the Minister. 
 I considered that and took it in conjunction with the expert view of the Institute for Fiscal Studies, which reached a similarly mixed conclusion. The hon. Member for Hamilton, South (Mr. Tynan) is shaking his head. He will be interested to know that the effect that he described by which working people do not bother to save because there is benefit is explained by the Institute for Fiscal Studies—the hon. Member for Northavon will know this better than me because he is a technical expert—as an income effect. The Institute for Fiscal Studies disregarded it, and looked purely at the substitution effect of whether or not it is worth saving for the future when 40 per cent. of those savings are taken away. The Minister will know that its conclusions were very mixed.

Bill Tynan: Does the hon. Gentleman accept that anyone who is in employment would rather have money on which to retire than be in a position in which they had to depend on benefit? If that is the situation for someone who is in work and saving for their retirement, surely there is no adverse effect in creating a system such as pension credits in order to deliver to the poorest people in society at the present time an incentive to live, not to save?

James Clappison: I do not disagree with some of what the hon. Gentleman says, but it is a question of whether a pension credit will encourage such people to save. We know, and the Government accept, that a 100 per cent. rate of withdrawal will not encourage them to save. The hon. Gentleman asks whether they will be in a better position than someone who has not saved at all. Plainly they will be, but that would also be true if there was a 99 per cent. rate of withdrawal and they received only a 1p benefit from savings. We are all working people, and anyone with common sense would realise that it is not worth saving 100 per cent. to have 99 per cent. of it taken away later.
 I am not an expert and have not given a particularly good summary of the essence of what the Association of British Insurers said. The ABI believes that there is an implied negative rate of return, and that someone would have to save for 10 years before they received a positive rate of return on what the Government propose. Perhaps the Under-Secretary will consider that.

Maria Eagle: The hon. Gentleman seems perilously close to arguing that to prevent any disincentive to save, the poorest pensioners must be kept in penury on very low income.

James Clappison: I am not arguing that. I am arguing on the basis of the expert evidence that was put before the Select Committee by the Association of British Insurers and the Institute for Fiscal Studies. We all want to encourage saving, but the question is whether the Bill does that.
 I have carefully listened to the Minister. The subject is of considerable importance, and the amendment is good. However, I am prepared to listen to someone who thinks that it can be improved, or that it can be made more explicit and include more information. For example, it could include a breakdown of information with regard to women. I shall consider in detail what the Minister has said. I would have pressed the amendment to a vote because it is so important, but I shall think about his comments, and consider how it can be improved given the support and interest in it from the Committee. I may return with a similar amendment on Report. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendment proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause stand part of the Bill. 
 Question agreed to. 
 Clause 1 ordered to stand part of the Bill.

Clause 2 - Guarantee Credit

Tim Boswell: I beg to move amendment No. 14, in page 2, line 24, leave out subsection (6).

Peter Atkinson: With this it will be convenient to discuss amendment No. 3, in page 2, line 26, at end insert—
'(6A) Such regulations may not apply to hospital in-patients.'.

Tim Boswell: I sense that we have had a useful afternoon, but that we may now want to make more progress. We shall see how far we get in the time left.
 When I examined clause 2, I was concerned that it was unamended. A maxim of an Opposition spokesperson in Committee—certainly one that I have followed in the past—is that if a clause is unamended, find something to ask about it and table an amendment to probe it. 
 I hope that my amendment goes further, and addresses a point of substance. The Under-Secretary almost revealed in the exchanges on the previous clause that the minimum income guarantee, which transmutes into guarantee credit, is substantially the same concept as the income support that it replaced. The level at which assistance is given, and the disincentives, if any, that exist to save are important matters, but we certainly do not want to rehearse them now. 
 I may wish later to ask the Minister some general questions about the operation of the guarantee credit, which arise more properly under clause stand part. Rather than trying to ask them now, I shall restrict myself to our amendment and that of the hon. Member for Northavon. 
 Amendment No. 14 has two purposes. The first is to smoke out from the explanatory notes whether prescribed amounts should be confined to hospital downrating. It would be useful to have the Under-Secretary's assurance that it is. If she is contemplating introducing prescribed amounts in other areas, where an arbitrary level would be substituted for the standard minimum guarantee, it will be useful to know that. 
 The second purpose of our amendment, which is the one of substance given that hospital downrating has been trailed, is to ask the Under-Secretary to comment on the thinking behind what has been done. The Committee heaved a collective sigh of relief, which I hope included the Ministers, when they were led, encouraged or dragooned by a combination of forces in another place to relax the hospital downrating rules from six to 13 weeks. That substantial hole has been kicked into the concept of the downrating rules and Ministers should say a little more about what is left and why. If a substantial chunk is removed—half the cost or value of the scheme by any analysis—we must ask what is left and whether it is appropriate. 
 I fully understand, and Ministers will know better than anyone else in the Committee, that there is a revenue implication. They cannot go around making concessions according to the state of the sun or the moon, but must consider their overall budgets. I shall not press them hard on the principle, but it would be useful to know a little more about their thinking on that. 
 The relict scheme, which reflects the wish from the start of the national insurance scheme in 1948 not to allow for double provision, is an anomaly. I am sure that that came into debates in another place. I do not want to suggest that an untypical case is typical, but it would be possible for a pensioner in receipt of the guarantee credit suddenly to receive a windfall or to return to work unexpectedly with a large increase in their income. They would retain their entitlement to the guarantee or any savings credit that may arise, and good luck to them. I am not arguing about that. However, I understand that, if people are confined in hospital and receiving support from the public purse for their board and lodging perhaps, that is the only exceptional circumstance in which the guarantee credit would be written down with substitution of a prescribed amount. Those people would be in an unusual and unique position. The Ministers should explain that—that is the purpose of my amendment—and justify whether we have now reached an equitable and acceptable position. 
 It is easy to say—perhaps it should be said from the Opposition Benches—that people confined in hospital have problems. They have health problems and the Ministers acknowledged in making their concessions the continuing obligation to expenditure outwith hospital. It is not simply a matter of keeping people 
 alive by providing food and shelter. A 13-week period is more acceptable than a six-week period, but it would help if the Ministers explained how they reached that position and whether that is the only prescribed exception that they are minded to make. 
 Debate adjourned.—[Angela Smith.] 
 Adjourned accordingly at five minutes to Seven o'clock till Thursday 18 April at half-past Nine o'clock.